Investment Advisor and Broker/Dealer Fraud, Mismanagement and Misrepresentation FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

March, 2012:

Securities and Exchange Commission v. Neal R. Greenberg, Civ. Action No. 1:11-cv-00313-JLK (D. CO)


Recently, the U.S. Securities and Exchange Commission announced that the United States District Court for the District of Colorado entered an Order amending a February 11, 2011 Final Judgment wherein Greenberg, without admitting or denying the Commission’s allegations, consented to the entry of a Final Judgment that enjoined him from violations of Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rules 206(4)-2, 206(4)-7, and 206(4)-8 thereunder. Greenberg was the former Chief Executive Officer and majority owner of registered investment adviser Tactical Allocation Services LLC (TAS) and the founder and head portfolio manager for a registered investment adviser wholly-owned by TAS, Agile Group LLC (Agile Group). The Final Judgment also found that Greenberg was liable for disgorgement of $3,941,185, plus prejudgment interest, but based on his financial condition waived payment of all but $330,000 of that amount and, in addition, required Greenberg to surrender his interests in certain Agile Group hedge funds. The Final Judgment imposed no penalty based on Greenberg’s financial condition and prohibited Greenberg from seeking reimbursement for the money and fund interests he was disgorging. Greenberg paid the $330,000 and those funds were distributed to Agile investors under a Court approved equitable distribution plan.

On January 31, 2012, the Commission moved for an order requiring Greenberg to pay the unpaid portion of his disgorgement, pre- and post-judgment interest thereon, and a maximum civil penalty, alleging that Greenberg’s statement of financial condition on which the Final Judgment was based was incomplete. The Order, to which Greenberg stipulated, finds Greenberg liable for disgorgement of $3,998,145, representing the unpaid portion of the amount ordered to be disgorged in the Final Judgment (original $4,328,145 judgment comprised of $3,941,185 in disgorgement and $386,960 in prejudgment interest, offset by the $330,000 Greenberg paid on January 24, 2011). It further orders Greenberg to pay a civil penalty in the amount of $3,941,185, and post-judgment interest through February 29, 2012 of $130,480.03. The Order further imposes a freeze on Greenberg’s assets.

According to the SEC’s original complaint in this matter, extensive losses were suffered by affiliated hedge funds managed and recommended by Greenberg, including the Agile Safety Fund, the Agile Safety Fund International, and the Agile Safety Variable Fund (collectively Agile hedge funds). The Agile hedge funds were marketed and managed by affiliated investment advisers Agile Group and TAS. The Commission’s complaint alleged that Greenberg negligently misrepresented the safety, suitability, and diversification of the Agile hedge funds to TAS clients, in many cases conservative investors in or near retirement. Further, the complaint alleged that Greenberg made inadequate disclosure concerning advisory fees; failed to implement adequate compliance policies and procedures; failed to properly supervise his subordinate investment advisers; and failed to provide account statements and annual reports to his clients.